We understand that there’s a lot of worry & confusion regarding the grants being offered by the government. Almost everyone’s livelihood has been affected one way or another by the Corona outbreak and so we thought that we’d try to help by sending out a breakdown of who qualifies and how to apply, along with the options available to those who don’t.
Self Employment – Income Support Scheme
This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed. Use this scheme if you’re self-employed or a member of a partnership and have lost income due to coronavirus.
Who can apply?
You can apply if you’re a self-employed individual or a member of a partnership and you:
• Have submitted your Self employed tax return for the 2018/19 tax year or plan to do so in the next few weeks.
• Traded in the tax year 2019-20
• Are trading when you apply, or would be except for COVID-19
• Intend to continue to trade in the tax year 2020-21
• Have lost trading/partnership trading profits due to COVID-19
Your self-employed trading profits must also be less than £50,000 and constitute more than 50% of your income in 2018/19. This is determined by at least one of the following conditions being true:
• Having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
• Having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period
If you started trading between 2016 & 2019, HMRC will only use those years for which you filed a Self-Assessment tax return.
If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.
HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.
How much will I get?
You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):
• 2016 to 2017
• 2017 to 2018
• 2018 to 2019
To work out the average yearly profit HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable), and then divide this by 12 to find the average monthly amount.
It will be up to a maximum of £2,500 per month for 3 months. The grant will be paid directly into your bank account, in one instalment.
How do I apply?
You cannot apply for this scheme yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online. Individuals do not need to contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme.
You will access this scheme only through https://www.gov.uk/. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.
What happens next?
Once HMRC has received your claim and you are eligible for the grant, they will contact you to tell you how much you will get and take your payment details.
If you claim tax credits you’ll need to include the grant in your claim as income.
Other help you can get
The government is also providing the following additional help for the self-employed:
• Deferral of Self Assessment income tax payments due in July 2020 . Payments are being deferred until 31st January 2021. This will be automatic and no application necessary.
• VAT payments due from 20 March 2020 until 30 June 2020. This is also automatic and no application required. Taxpayers have until 31st March 2021 to pay any liabilities that accumulate during the deferral period.
• Grants for businesses that pay little or no business rates
• Increased amounts of Universal Credit – Call on 0800 328 5644
• Business Interruption Loan Scheme
If you’re a director of your own company and paid through PAYE you may be able to get support using the Job Retention Scheme.
PAYE – Job Retention Scheme
Under the Coronavirus Job Retention Scheme, all UK employers with a PAYE scheme will be able to access support to continue paying part of their employees’ salary for those that would otherwise have been laid off during this crisis.
This applies to employees who have been asked to stop working, but who are being kept on the payroll, otherwise known as ‘furloughed workers’. If your employment status is changed to ‘on furlough’, you can not and your employer should not ask you to undertake any work for the company during that period.
HMRC will reimburse 80% of their wages, up to £2,500 per month. This is to safeguard workers from being made redundant.
Your employer can go here to check eligibility & apply for the scheme
The Coronavirus Job Retention Scheme will cover the cost of wages backdated to 1 March and is initially open for 3 months, but will be extended if necessary.
What if my working status doesn’t apply to either?
Unfortunately, you wouldn’t qualify for any grant at this time. This will apply to tens of thousands of people up & down the country and we believe it’s unlikely that any further measures will be announced to support those, who like you fall between the two support packages outlined above.
The first thing you should do is apply for Universal Credit, housing support & the other associated benefits. If you’ve any savings (most of us don’t) or tax put aside, you can use that with income tax payment deadlines being deferred by HMRC but these are only of course short term fixes as are personal and business interruption loans, so we truly hope that everyone is back on their feet & able to go back to work safely asap.
Universal Credit – Call on 0800 328 5644
Completing your next or any outstanding tax returns
With regards to your personal tax return for 19/20, we can submit anytime after it’s issued next Monday (6th April).
This will of course help you by letting you know asap exactly how much tax will be either owed (along with any potential payments on account) by Jan 2021 or indeed due back to you as a refund on overpaid CIS tax or payments on account once expenses have been detailed. We can claim any refund achieved for you as soon as the return has been processed by HMRC.
Our team are all set up and working remotely so we can continue working with you to get you back the tax refund you’re owed and give any advice we can.
We’re open from 9am-7pm Monday through Thursday & until 6.30pm on a Friday so you can call us anytime to discuss your situation and work out what we’d need to get started on 01280 821020.